Nimba Western Range Iron Ore Project

Liberia

Project Phase 2: 2013-2034

Iron Ore Mining,

Concentration,

Transportation

and Export

Page 2 of 9

Background Mining at Mount Tokadeh, in Nimba County, Liberia, took place between 1973 and the early 1990s, linked to iron ore mining in the East Nimba Range carried out by LAMCO and then LIMINCO. Mining at Tokadeh is currently undertaken as part of ArcelorMittal’s Phase 1 Direct Shipping Ore (DSO) activities and will be expanded under the proposed Phase 2 Concentrator ore extraction and processing project. Mounts Gangra and Yuelliton are still green field sites as far as mining activity is concerned; although permitted for Phase 1 DSO mining, these areas are now expected to be mined only under the Phase 2 project.

Project Summary Construction, Operation and Closure. Construction works will take place from 2013 to 2015. Operation will happen from 2016 to approximately 2034. Closure and land restoration activities will occur over about 10 more years. Mining. There will be opencast mining of around 450 million tonnes of low grade iron ore (oxides and transition ores with Fe contents of 40 to 60 percent) from the ore bodies at Mounts Tokadeh, Gangra and Yuelliton in Nimba County. In this second operational phase, the concentrating plant is designed to produce 15 million tonnes per year of concentrate, which requires treating up to 18 million tonnes per year (2016 to 2017) of oxide and up to 30 million tonnes per year (2018 to 2034) of transition crude ores from the three deposits. Remaining deposits of DSO will be used up between 2013 and 2017 at the rate of around 4 million tonnes per year. Mining will be done by large excavators and the raw ore will be hauled to the crusher using big tipper trucks. This aspect of the operation will be very similar to that employed by LAMCO. Blasting will be needed at times, when pockets of hard ore are encountered. Crushed material will be stored in a stockpile prior to feeding the concentrator. Ore processing. The beneficiation operation requires a major processing plant, which will be installed adjacent to the Tokadeh mine. This takes the crushed ore from the stockpile and first grinds it to an even size. It is then mixed with water and the iron separated out by a series of flotation, spiral separation and magnetic systems. Concentrator product – the refined material with 65 percent Fe content – will be sent directly to the rail load-out stockpile. Waste product from the concentrator will be fed as a slurry to a tailings management facility. This requires an earthen tailings dam, and a water supply and circulation system. The tailings dam will be located to the north-east of Mount Tokadeh, in the catchment of the Madayea Creek which flows off the mountain towards the north. Water for the system will be drawn from two large sediment and silt treatment ponds, and re-circulated within a loop between ponds, concentrator and tailings dam. Losses in the extracted material, and through seepage and evaporation, will be replenished through natural inflow to the sediment ponds. Surplus water will be released from the silt treatment pond into the environment, and specifically into the Dayea River catchment. The processing facilities, comprising the crushers, screens, concentration equipment, conveyors and pumps, require a considerable amount of power. This is to be provided by a dedicated power plant, which will be located close to the concentrator at the Tokadeh site. It is proposed that the processing operation will be located in the former LAMCO ore processing area between the foot of Mount Tokadeh and the railway, since there is a suitable location that minimises material movements and therefore maximises energy efficiency. This facility will occupy around 5 km2, on brown field land. The tailings dam and sediment ponds will be on green field sites in secondary forest and heavily degraded bush.

Page 3 of 9

Page 4 of 9

Transportation by railway. The concentrated ore will be transported along the existing railway to the Port of Buchanan, a distance of 250 km. This will use the full LAMCO design capacity of the railway. Apart from improved communications and regular maintenance there will be no further development of the railway. It is anticipated that there will be five units, each of one locomotive and 70 wagons, between them running seven trips per day in each direction. The railway runs right across the middle of Liberia, from almost the furthest inland corner in the Nimba mountains, to the coast. It runs across the north-western edge of Nimba passing close to the Guinea border, across the south-eastern side of Bong and across the centre of Grand Bassa County to reach the Port of Buchanan. Of its length, nearly 100 km is in Nimba, 60 km in Bong and 90 km in Grand Bassa. Export by sea. At the Port of Buchanan the ore will be transferred from the trains into ships for export from Liberia. The operation of the facility will essentially be at its original LAMCO design capacity, and no further expansion of the port is envisaged. The loaded trains will pass through a car dumper, which rotates and empties each wagon in turn, on to a conveyor. From here the ore is carried to a large stockpile. When a ship is loading, the ore is reclaimed from the stockpile and taken by a series of conveyors right to the ship’s hold. Like the railway, the port at Buchanan is also well suited for the proposed activities, and is the terminus of the railway. It is well protected by breakwaters and can accommodate ships of sufficient size to export the ore at the rates currently anticipated in this phase of the project. Towns. Additional township development will take place at Yekepa and Buchanan, requiring housing refurbishment and the upgrading of services, including drinking water, power, sewage treatment and waste management. A temporary construction camp will be required at Yekepa for a maximum of 1,500 workers and a railway maintenance camp will continue to operate at Greenhill in Bong County, part way along the railway.

A train load of Tokadeh DSO en route to Buchanan China Triumph, about to sail with 193,000 tonnes of

Tokadeh DSO in March 2013

Specific Components A number of the project’s components require special design to ensure that they comply with modern environmental standards. These are considered here. Tailings dam. The tailings dam will be large and will develop gradually over a 20-year period. Its purpose is to store waste material from the concentrator safely, and it is a standard practice for mining world-wide. Iron ore tailings are not hazardous (i.e. they have no chemical toxicity) but the storage of partially saturated material behind a dam requires special engineering precautions.

Page 5 of 9

Four successive stages in the development of the tailings dam. Tailings enter from the right (eastern side) as pumped mud slurry and clean water is decanted from the pond on the left (western side). The active part of the system is therefore against the natural ridge to the west. The tailings consolidate against the dam on the other three sides: the final dam is shown by the green shading in the right hand image.

The following measures have been adopted in ensuring the stability of the tailings dam.

The construction methodology has been cross-checked independently.

Dam stability analysis has been done and cross-checked independently.

Soil-water seepage analysis has been undertaken of all of the dam structures.

A flow out analysis has been undertaken (to ensure that the worst case scenario has no damaging results).

The emergency overflow system has been doubled, so there is both a syphon system and a protected overflow channel at every stage of construction.

The No Way Camp Disaster of 1982 on the Mano River, which involved a tailings dam, has been assessed to make sure it could not be repeated. We are proposing a very different layout, so it cannot happen here.

A detailed risk assessment is being undertaken of all aspects of the facility.

A full Operation, Maintenance and Surveillance Manual is being developed before construction starts. This will guide all of the construction and management procedures throughout the life of the facility.

A tailings dam at an ArcelorMittal facility in Schematic cross-section of the tailings dam. The initial Ukraine. starter dam is raised successively by a series of smaller dams on the consolidating tailings.

Page 6 of 9

Waste dumps. During the LAMCO period, mine spoil (soil and the unwanted overburden above the ore bodies and rock strata between the layers of ore) was simply thrown away, down the sides of the mountains. This is still eroding and damaging the rivers today. Waste dump stability has been calculated on the basis of the underlying materials, the slope of the terrain, and the actual stability criteria of the materials being dumped. This leads to construction of an initial wide footprint as the final outer perimeter, and upward gradation of compacted spoil in lifts and terraces of determined size. Revegetation will be undertaken as the dumps grow. Soils will be stockpiled separately for land reclamation. Diagram of the Tokadeh waste dump structure (blue). Water discharge. We recognise that all creeks and rivers are someone’s drinking water supply. For this reason all of our operations are required to abide by World Bank guidelines for discharge water quality. Sedimentation dams are installed to trap silt and ensure that the water is clean at the point of discharge from the site. Environmental staff monitor water quality regularly.

Building a Phase 1 sedimentation dam Water must be clean at the point of discharge

Train safety. ArcelorMittal’s railway runs across Liberia and passes many towns and hamlets. When it was re-opened in 2011, a concerted effort was made to raise awareness of the dangers of the trains. In general the population living close to the railway now understand well the speed of

the trains and the fact that they cannot easily stop. Strict speed limits and audible warnings must be observed by the drivers, and the busier crossings are manned by guards. Nevertheless, complacency is a concern and a rail safety awareness campaign occurs regularly. Marine safety. Ships operating on behalf of the company must abide by both Liberian Maritime Regulations and the safety and environmental provisions of international conventions and the International Maritime Organisation. These include safety measures for artisanal fishermen and pollution prevention.

Page 7 of 9

Alternative Options ArcelorMittal has examined a large number of alternative options. These were originally based on LAMCO feasibility studies undertaken in 1980 and 1984, and assessed in detail in new studies in 2005 and 2008. A number of efficiency savings are now possible with modern technology and best practices. In particular, infrastructure layouts were adapted to accommodate environmental considerations. These ensure that primary forest areas – Nimba’s special resource – and water courses are preserved wherever possible. The take of agricultural land was also minimised. The choice of Nimba for the concentrator and tailings management facility rather than Buchanan is a significant departure from the original LAMCO layout, though it was also proposed as a revised project in 1980. The reasons for this are as follows.

LAMCO had its wash plant at Buchanan, which processed high grade ore by removing fines. The proportion of waste was small relative to the saleable product. ArcelorMittal’s waste will be greater as we will be refining low grade ore and removing the impurities that constitute up to half of the natural volume.

Concentration in Buchanan means transporting more material across the country. Fuel was very cheap in the 1960s so transport was cheaper for LAMCO.

All of the LAMCO facilities at Buchanan were destroyed during the war. Starting again, it is important to minimise operating costs. With high fuel prices, this means that haulage must be minimised.

Job needs are higher in Nimba than Grand Bassa: the concentrator and tailings will employ around 500 long term.

The LAMCO tailings dams at Buchanan were not environmentally sound as they removed mangrove swamps.

Water management at Buchanan is problematic due to the dense population and lack of land for a retention dam.

Other options considered involved a range of different mine phasing scenarios, concentrator and other facility alternatives in Nimba, power generation possibilities, conveyor versus haul road choices, construction materials sources and deep water ship loading options.

Project Benefits The main benefits from the project accrue to the Republic of Liberia as a whole. National benefits. The Government of Liberia expects mining to support the Liberia Rising 2030 plan, and the Nimba Western Range Iron Ore Project is the flagship for the sector. The current Phase 1 DSO Project was the largest contributor to Liberia’s GDP growth of 9 percent in 2012. The Phase 2 contribution was estimated by the International Monetary Fund to be a clear $ 2.4 billion to the Government of Liberia in royalties, taxes and other direct payments. In addition, since the Government is a 30% shareholder, it will receive an equivalent proportion of profits. Beyond the huge capital investment in the project, most of the operational expenditure for the life of the mine will accrue in-country. Beyond this, the project will generate direct employment, skills development and infrastructure benefits to the operational areas. Local benefits. The counties affected by the project, but especially Nimba, will benefit from approximately 2000 jobs created for over 20 years. There will be further spin-offs from money being spent in the area, such as food and service purchases. Two company-run hospitals and the Vocational Training Centre at Yekepa are already open to communities. The company has pledged to fund the upgrading of the Ganta-Yekepa Highway to black-top (coal tar). The County Social Development Fund has been fully paid to government on schedule every year, and in Phase 2 an environmental offset Programme will promote forest conservation and management

Page 8 of 9

Environmental and Social Impacts In accordance with the Environmental Protection and Management Law (2002), ArcelorMittal has commissioned a full Environmental and Social Impact Assessment (ESIA) and submitted it to the Environmental Protection Agency for review, public consultation and approval. It has also been made public via the internet (http://www.arcelormittal.com/liberia/western_range_phase2.html). The ESIA covers all aspects of the proposed Phase 2 project, and focuses on the potential impacts on the surrounding environment, and the ways that these need to be mitigated. It records the detailed baseline surveys, impact assessments and environmental management proposals for the physical, biological and socio-economic environments. Relevant environmental standards, guidelines and management plans developed by the company are also contained in its volumes. Physical Environment. The physical environmental impacts associated with the project relate primarily to the reduction of the mountain tops by approximately 75 to 100 metres at Tokadeh, Gangra and Yuelliton, and the land take required to construct and operate the works. The potential to pollute watercourses downstream of the mine is high, and this could have significant secondary effects associated with water usage by local communities and riverine biological habitats. To avoid and mitigate this, a comprehensive plan of protection and retention is required with regular maintenance and effluent monitoring. It is a current priority of the company to implement appropriate measures for the control of erosion and to design, construct and maintain runoff retention structures in order to reduce effects to acceptable levels. Other aspects concerning the physical environment relate to air quality and noise. Biological environment. The Gangra-Yuelliton and Tokadeh ridges lie on the eastern margin of a large forest area remaining mostly intact that contains rich biodiversity and many examples of rare and globally threatened animals and plants. Some groves of forest within mine footprints also contain tall, closed canopy trees, and several species of narrow global range with high priority for conservation. It is anticipated that 227 hectares of moist evergreen forest, 6 hectares of montane forest and 1,242 hectares of other land, mostly degraded forest and shifting farms, will be removed by the actual mine and its infrastructure. Some 250 hectares of Level 1 biological constraint area (high biodiversity habitat) will be part of this forest clearance. Social environment. The project is likely to result in a significant increase in human population in the area (workforce, service providers, job-seekers and other migrants) and this will place increased pressure on local resources. Approximately 385 hectares of agricultural land will be removed from community use by the implementation of the exclusion zone and the combined Phase 1 and Phase 2 layouts. Most of the increased population is likely to be in Yekepa. Resettlement. The Company is in the process of undertaking a Resettlement Action Plan and Livelihood Restoration Programme for Phase 1, and has developed a Framework Resettlement Plan for Phase 2. It is implicit that this programme be fully inclusive of all social groups and be based on a case-by-case assessment, leading to the provision of equal or improved and sustainable livelihoods. The ESIA supports the importance of a robust Community Development Programme including the current agricultural intensification initiatives and the support of local handicrafts and other small scale economic development initiatives to assist in the creation of alternative sustainable livelihoods. Environmental Offset Programme. ArcelorMittal intends to expand its current Biodiversity Conservation Programme into a larger programme for the duration of the Phase 2 project. This will compensate for the environmental changes caused by the company by working with the Nimba communities, government bodies and NGOs to develop improved livelihoods, stabilised agricultural systems and sustainable forest conservation management. Closure and land restoration. The company is already developing the plans and methods that it will use to restore damaged land and restore it to forest as its use comes to an end.

Page 9 of 9